The market looks to be starting a bounce into the sp'1680s, and once again, many are now touting much higher levels in the near term. Yet, the weekly/monthly charts suggest rather significant underlying downside pressure across the next few months.
sp'weekly9c - downside to the primary trend
To be succinct. Not only do we have the weekly index charts showing a clear rollover, but we also have the hugely important monthly charts seemingly also rolling over.
In my view, in order for the weekly9c outlook to have any validity, we MUST see a hit of the lower weekly bollinger in the current multi-week down cycle. So long as the 1709 high is not taken out, the current bearish target zone of sp'1575/50 by mid-September remains valid.
I have to say, with a blue candle on the monthly, and a red on the weekly, I feel pretty good about further downside across the next 3-4 weeks.
Wednesday will be all about the FOMC minutes, due for release at 2pm. How many times did the word 'taper' get mentioned? Who said what..and why? Do YOU care?
I don't, although I realise the HFT algo-bots will be reading every word.
*there is no sig' QE until Friday.
So, the plan for tomorrow? Well, I certainly won't consider any index shorts until the sp'1680s. I'll consider a long, on any move lower, especially around 1635, but I find that very unlikely tomorrow. Considering the strength seen in the Trans/R2K, I am guessing we'll merely battle broadly higher, regardless of how we might open.
Goodnight from London